SuperValu Works to Break Through Tough Times

Grocery-store operator SuperValu (SVU) has been watching its revenue and profits decline. The recession has been hard on the company, and rising food prices are tough as well. SuperValu has responded by cutting costs. The grocery chain laid off workers and closed stores in order to become more efficient.

Yet the numbers still look gloomy. For the fourth quarter of fiscal 2011, revenue fell 6 percent on year to $8.66 billion. Net income fell 2 percent to $95 million.

For the year, revenue fell 8 percent to $37.5 billion, while the company reported a net loss of $1.5 billion compared with a $393 million profit from a year ago.

Falling revenue isn't a good thing for retailers.

However, for fiscal 2012, the company is optimistic, lifting its earnings forecast to a range of $1.20 to $1.40, exceeding analysts’ expectations, which was a very welcome surprise in the markets.

"Today, we are aligned and working toward the common goal of delivering greater value to our customers. We enter fiscal 2012 with momentum, a solid plan and new capabilities to drive our business transformation, invest in price and deliver sequential improvement to ID sales," says company CEO Craig Herkert in an earnings statement.

Sunnier Horizons

The company's stock price soared on the earnings outlook, as market observers feel the company is ready to return to better times.

Looking ahead, many analysts feel the company’s streamlining plans will pay off farther down the road.

“SuperValu’s rating outlook is stable, reflecting our expectations that the restructuring efforts will ultimately be successful and that the company will remain a sizable force in food retailing and distribution,” Moody’s Investors Services says in a company note.

Grocery-store operator SuperValu (SVU) has been watching its revenue and profits decline. The recession has been hard on the company, and rising food prices are tough as well. SuperValu has responded by cutting costs. The grocery chain laid off workers and closed stores in...